Packaging giant Smurfit Westrock says Mexico tariffs would squeeze US consumer spending
DUBLIN, Feb 12 (Reuters) - The world's largest cardboard box maker Smurfit Westrock expects U.S. consumer spending to be squeezed significantly if 25% tariffs on Mexican goods go ahead, its CEO said on Wednesday after the company's shares dropped on disappointing fourth quarter earnings.
U.S. President Donald Trump this month suspended a 25% tariff on goods from Canada and Mexico until March. Smurfit Westrock has large production facilities in all three countries following last year's $11 billion merger between Europe-focused Smurfit Kappa and U.S. rival WestRock.
While Smurfit Westrock largely sells to customers within each of the 40 countries it operates in, it said many of its Mexican customers use its packaging to sell food such as fruit and vegetables into the United States.
"There will be, I would say, a very significant customer effect," Smurfit Westrock chief executive Tony Smurfit said on a call with analysts regarding the potential tariffs on Mexican goods.
"Tariffs are on the consumer so at the end of the day is the consumer going to pay 25% more for their avocados and their oranges...or whatever they buy? We'll have to wait and see because that'll be up to the American consumer and how that affects demand."
He added that Smurfit Westrock would have to "take a good look" at its large mill in Canada that exports paper to the U.S. if a 25% tariff is applied as it would very quickly become uncompetitive.
Smurfit reported full-year core profit of $4.7 billion and while that was in line with its expectations, earnings before interest, taxes, depreciation and amortisation of $1.166 billion in the final three months of 2024 were below the $1.258 billion expected by an average of 6 analysts with LSEG SmartEstimate.
Its main U.S. listed shares were 5.6% lower at 1510 GMT.
The Irish-headquartered company said it expects to make a core profit of $1.25 billion in the first quarter and that the year has "started well"."
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